Curtain rises in 2013 on final act in soap opera over new arena for Oilers

An artist's rendition of a proposed arena for Edmonton is shown in a handout. A cost-shared deal between the hockey-mad city and the Edmonton Oilers to build a palatial downtown rink for the NHL team went from deal to no-deal to possible deal in 2012, with all sides now agreeing a final resolution â one way or the other â must come early in 2013. THE CANADIAN PRESS/HO-City of Edmonton

2012-12-28 08:00:00

EDMONTON - It started out as a sports arena but has become Edmonton's longest running soap opera.

A cost-shared deal between the hockey-mad city and the Edmonton Oilers to build a palatial downtown rink for the NHL team went from deal to no-deal to possible deal in 2012, with all sides now agreeing a final resolution—one way or the other—must come early in 2013.

It has been a series of setbacks and cliff-hangers enough to turn gung-ho glass-half-full Edmonton Mayor Stephen Mandel into a head-shaking fatalist.

"This is the last kick at the cat, more or less," said Mandel after the city and Oilers owner Daryl Katz agreed Dec. 12 to resume one last round of talks, with the help of a mediator.

"We'll see if anything happens from it.

"I'm not sure (of a solution) any more than I was before. I think there's a long row to hoe."

Local hockey fans can be excused for rolling their eyes following four years of fuzzy numbers, shifting statements, apologies, bluster, brinkmanship and revisionist history.

It was a deal everyone thought was done in October 2011, but it fell apart a year later when Katz demanded an extra $6 million a year from taxpayers along with a promise that the city ignore its own tendering rules and move its staff in as the anchor tenant in a proposed Katz office tower.

"It's wrong to hold us up for ransom," said Mandel on Oct. 17 when council formally voted to walk away from the deal to build the $478-million rink.

If the debate has become melodrama, then the mercurial, spectral Katz (pronounced CATES) is in the starring role.

The 51-year old pharmacy billionaire and owner of the Rexall chain of stores has been a polarizing figure since he bought the Oilers in 2008 and began stumping for a new downtown arena to replace aging Rexall Place, in the city's industrial north end.

The mop-topped magnate and philanthropist has been hard to pin down.

Interviews with journalists are rare and requests from many agencies, including The Canadian Press, have been rebuffed. Katz statements are largely restricted to email fan-outs or answers to sympathetic questions from a Katz staffer in broadcast interviews.

He has shown an understanding that celebrity is currency, carefully doling out biographical details in uncontextualized snippets, leaving fans to speculate about his true intentions, values and aims.

When he bought the Oilers in 2008, he cast himself as Katz the Visionary, the hometown boy who grew up an Oilers fan now handed a chance to give back.

"I don't know if I would have had the same enthusiasm (to buy the team) but for the opportunity to build a new arena and to revitalize downtown," Katz said at the time.

"Somebody had to step up."

When negotiations dragged on over the next three years, Katz cast himself as Gordon Gecko, moviedeom's pitiless Wall Street moneyman.

"Hockey is not philanthropy," he opined to The Globe and Mail in July 2012 in an interview beneath the nine-metre-tall windows of the living room in his mansion overlooking Edmonton's river valley.

"This is a business. Capital is portable."

As public opinion turned against Katz last fall as he asked for millions of dollars more from the public, Gordon Gecko was replaced by Katz the Crazy Dreamer, a put-upon family man just trying to help his community against his better business judgment.

In the same interview he cast himself as Katz the Martyr, pilloried by critics despite rescuing the team from crisis, ruin and possible relocation.

"I bought the Oilers because the EIG (Edmonton Investors Group) was fractured and Edmonton's ability to keep the team was at risk," he said.

Reports at the time, however, described the chaos as more of a self-fulfilling prophecy after Katz made an escalating series of uninvited share offers that ultimately fractured the ownership group between those who wanted to cash in and those who wanted to stick it out.

Katz has also bounced between bluster and apology.

In late September, he threatened to move the team to Seattle, but then he later said sorry in newspaper ads after getting vitriolic blowback from fans on the Internet and in the media.

He has also demonstrated a tin ear for politics.

When city council demanded last fall that he appear before them in public to explain why he wanted millions of dollars more, he twice refused them and, for good measure, publicly scolded them for failing to show "political leadership."

At the next meeting on Oct. 17—when the politicians canned the deal—councillor Jane Batty sarcastically thanked Mandel for finally showing "political leadership."

Both sides agree money is the stumbling block and have agreed to let a third party examine each side's financial projections.

It's still a fuzzy area because the Oilers, as per the norm with professional sports franchises, refuse to open their books.

The result has been a debate about numbers without the numbers. Independent forecasters estimate the Oilers are making millions of dollars a year. The Oilers say they're bleeding buckets of red ink.

Mandel said he still believes the Oilers are getting a good deal on the rink, which ultimately would cost more than $700 million when land costs and other related infrastructure kicked in.

Under the deal, taxpayers and ticket-buyers would build the facility. The city would own it and try to recoup the cost by extra property taxes from new office towers, restaurants and condos to be built up around the 18,400-seat facility.

In return, the Oilers would pay to run and maintain the facility for 35 years (estimated at $10 million a year) in addition to an annual $5.5-million payment to the city.

The team would keep all food and ticket revenue from Oiler games and other events at the arena for 11 months out of the year. Katz would also get naming rights (worth $1 million a year or more) and $2 million in advertising from the city for each of the first 10 years.

Katz says in recent months he has had a second look at the deal and insists it needs to be changed.

On Dec. 12, Katz negotiator John Karvellas told council there's no guarantee Alberta's petro-powered economy will stay strong, adding there's concern that out-of-towners may not want to drive downtown to a hockey game.

"We learned (from research) that the shine wears off a new arena in a hurry," said Karvellas.

He said while Oilers will no longer insist on a $6-million a year subsidy, any extra revenue from taxes should go into a fund for the team.

How is that not a subsidy? asked Counillor Amarjeet Sohi.

"I understand that if it walks like a duck, talk or quacks like a duck, then it's a duck, replied Karvellas.

"But I don't think this is a duck."

While the duck is debatable, there remains a $100-million elephant in the room.

Even if the two sides come to agreement, they still need to pry that nine-figure sum out of Premier Alison Redford's provincial government to fully fund the deal.

It's a problem that became more problematic in October when election documents showed Katz, his family, and business associates donated an eye-popping $430,000 to Redford's Progressive Conservatives in the spring 2012 election campaign.

Katz has never spoken about it. Redford maintains, as the Tory government has for years, that there will be no direct subsidy to the arena.

Karvellas, when asked about his contribution, said it was for good government, nothing more, nothing less.

Mandel is now trying to de-Katzify the debate, insisting the issue is not about personalities but about a new rink that all of northern Alberta can enjoy.

Redford's opponents, nevertheless, are poised to pounce on any perceived favouritism for Katz.

The NDP says the help has already begun.

Under provincial funding rules, health clinics can charge the province $10 for every flu shot. But in October NDP leader Brian Mason pointed out that new rules from Redford that kicked in after the election now allow pharmacies like Rexall to deliver the same flu shot at twice the price.

Critics say the $100-million shoe has yet to fall but have two words for taxpayers: Stay tuned.